x Abu Dhabi, UAESaturday 20 January 2018

Fidel Castro's U-turn inevitable and irrevocable after Soviet collapse

Analysis:The Cuban leader's confession that the economic model was no longer working has been an about-face waiting to happen.

Officially, 95 per cent of Cuba's working population, including the workers at the Fama clothing factory above, are employed by the state and unemployment never rises above three per cent.
Officially, 95 per cent of Cuba's working population, including the workers at the Fama clothing factory above, are employed by the state and unemployment never rises above three per cent.

Fidel Castro never does or says anything without careful thought, and at the age of 84 the former Cuban president is not going to start now. So when he tells an American magazine interviewer, as he did last week, that not only is the Cuban economic model not exportable but that it no longer works even in Cuba, then that is hardly likely to be the beginning or end of the matter. And so it has proved. Barely had the dust settled on that bombshell when Raul Castro - who took over as president in February 2008, as his elder brother recovered from debilitating intestinal surgery - authorised an announcement by the Cuban Workers' Confederation that at least half a million state employees would lose their jobs by early next year.

In a country of 11 million people in which 95 per cent of the 5.1 million working population (officially) is employed by the state and unemployment (officially) never rises above three per cent, it is impossible to overstate the scope of this reversal; it is as if the captain of an ancient and overloaded supertanker in mid-Atlantic suddenly ordered the crew to dump the cargo and change the destination from Murmansk to New York.

Some trace this back to a TV speech by Raul in April, in which he pointed out that up to 20 per cent of the workforce performed no useful function, followed by an address to the national assembly last month in which he said: "We have to erase forever the notion that Cuba is the only country in the world in which people can live without working." Others go back further, to 2006, when the elder Castro initially transferred power to his brother, who used it to initiate some minor relaxation of the rules restricting private enterprise, particularly in agriculture.

But the truth is that this about-face became inevitable with the economic collapse of the Soviet Union in 1991, when the largesse that kept Cuba afloat and financed its world-class health and education systems was instantly switched off like a tap. The ship has been slowly sinking ever since. As the Workers' Confederation said in its statement yesterday: "Our state cannot and should not continue supporting businesses, production entities and services with inflated payrolls, and losses that hurt our economy are ultimately counterproductive."

The question is whether Cuba can create an instant private sector to take up the slack generated by state-sector redundancies. As Alberto Fuentes, 47, a government worker, told the Associated Press yesterday: "For me the problem is the salaries. If they fire all of these people, how can they all become self-employed?" The answer, as Mr Fuentes ought to know, is that many of them already are. Cuba has a vast private sector. The country could not function without it. But until now, most of it has been illegal.

Maria Gutierrez, 46, (not her real name: "I don't trust Raul any more than I trusted Fidel," she says) teaches physical education in a primary school by day, but in the evenings and on her days off she runs an illegal hairdressing salon in the kitchen of the family home in Santa Fe, a suburb on the outskirts of Havana. The salon's equipment is more modern than anything to be found in a state-run equivalent, because Ms Gutierrez's sister lives in London and smuggles the latest kit in her luggage on her twice-yearly visits. So Ms Gutierrez does well. "I suppose I make around $200 [Dh735] a week," she says.

"But I really don't know what will happen now," she said yesterday. "I read that now maybe they will give me a licence, which I will have to pay for, but they don't say how much it will cost. After that, I can keep what I make from my customers. If that's true, I will have more business, and I could employ a girl to help me." Pablo Hernandez, 52, is equally wary. For the past 20 years his four-bedroom home in the relatively upmarket Havana district of Miramar has been effectively a furniture store. Everything in it is for sale, replaced by new stock off the black market.

Two decades of trade have made Mr Hernandez a wealthy man by Cuban standards, but he dare not show it for fear of arrest. He drives a 20-year-old Lada and dresses like a street tramp. "Maybe now things will change," he said yesterday. "I would like to buy my own proper store instead of selling stuff out of my house. And I wouldn't have to do all the work myself. But in this country, who knows what will happen next? I will wait and see."

As indeed will everyone else. But it appears that this change of direction is permanent. Cuba is about to let the private-enterprise genie out of the bottle. Putting it back will not be possible.